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Pound US Dollar (GBP/USD) exchange rate forecast: US Employment Data to Lift the ‘Greenback’?

Stacks of US Dollar (USD) banknotes.

The Pound US Dollar (GBP/USD) exchange rate traded in a narrow range this morning with both US and UK data running thin on the ground.

At the time of writing the GBP/USD exchange rate is trading at around $1.2606, virtually unchanged from this morning’s opening rate.

US Dollar (USD) Muted Ahead of Jobs Data

The US Dollar (USD) is rangebound this morning amid a lack of data.

However, the release of the latest US employment data this afternoon may drive significant USD movement.

The ‘Greenback’ may see a volatile afternoon of trade ahead with the release of the latest US employment data. Initial jobless claims are set to have decreased in the week ending 3 February, declining to an estimated 220,000, down from the previous week’s 224,000 new benefits claimants.

Should the data print in line with expectations, USD could rise amid signs of renewed resilience within the US labour market.

Also due this afternoon, a speech from Federal Reserve policymaker Thomas Barkin could underpin any of the US Dollar’s potential gains, should Barkin continue to push back against any interest rate cuts in the first quarter.

In the meantime, an increasingly gloomy spell of trade could offer the ‘Greenback’ some additional support.

Pound (GBP) Muted ahead of BoE Speeches

The Pound (GBP) is retreating from yesterday’s hawkish gains this morning amid a lack of fresh economic data.

Ahead of potentially impactful speeches from opposing BoE policymakers later today, investors appear reluctant to place any aggressive bets on Sterling.

Firstly, BoE dove Swati Dhingra, the sole rate-setter to vote for an interest rate cut during last week’s policy update, is due to speak this afternoon. Dhingra advocated for interest rate cuts earlier this week, warning of the ‘downside risks’ that persistently high interest rates could incur. Continuation of this narrative may see GBP fall.

An hour later, Catherine L Mann, one of two rate-setters to vote for a hike, will deliver a speech. Mann is likely to strike hawkish, opposing prior commentary from her cohort.

Conflicting commentary may ultimately see GBP waver, potentially omitting clarity amid differing reviews from BoE policymakers.

A lack of data for the remainder of the week may see the increasingly risk-sensitive Pound left vulnerable to market mood, with any cheery trade likely to boost GBP.

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